EVERTEC Reports Fourth Quarter and Full Year 2023 Results
- Revenue increased by 20% to $194.6 million in Q4 2023.
- GAAP Net Income attributable to common shareholders was $11.5 million, a 61% decrease.
- Adjusted EBITDA increased to $71.7 million in Q4 2023.
- Adjusted earnings per common share was $0.62, a 6% decrease in Q4 2023.
- Full-year 2023 revenue grew by 12% to $694.7 million.
- $49 million returned to shareholders through share repurchases and dividends in 2023.
- The Company intends to enter into an accelerated share repurchase (ASR) agreement for $70 million.
- 2024 outlook includes total revenue between $844 million and $854 million with approximately 21.5% to 22.9% growth.
- Adjusted earnings per common share expected to be between $2.82 to $2.94 in 2024.
- Capital expenditures anticipated to be approximately $80 million, including Sinqia.
- Effective tax rate projected to be approximately 7% to 8% in 2024.
- GAAP Net Income attributable to common shareholders decreased by 61% in Q4 2023.
- Adjusted EBITDA margin decreased by approximately 590 basis points to 36.8% in Q4 2023.
- Adjusted earnings per common share decreased by 6% to $0.62 in Q4 2023.
- Adjusted EBITDA margin decreased by 262 basis points to 42.0% in full year 2023.
Insights
EVERTEC's announcement detailing a 20% revenue increase juxtaposed with a 61% decrease in GAAP Net Income for Q4 2023 is a mixed signal for investors. The revenue growth, particularly from the Latin American market, is a positive indicator of the company's expanding footprint in the region, especially following the Sinqia acquisition. However, the sharp decline in net income is a concern, likely attributed to increased costs associated with the acquisition, such as integration, personnel and financing expenses.
The company's strategy to engage in an accelerated share repurchase (ASR) agreement for $70 million suggests confidence in the intrinsic value of their stock, which could be seen as a commitment to returning value to shareholders. However, this move will need to be financed and the impact on the company's leverage and liquidity should be closely monitored. The repurchase also reflects management's attempt to offset the dilutive effects of acquisitions and provide support to the earnings per share (EPS) metric.
Looking ahead, EVERTEC's 2024 outlook indicates a significant revenue increase, yet the forecasted growth in adjusted earnings per share is modest. This suggests that while the company is growing top-line revenue, it may face challenges in translating this into bottom-line profit, possibly due to integration costs and increased depreciation and amortization expenses. Investors should assess the long-term profitability potential against the backdrop of these short-term financial dynamics.
EVERTEC's performance in the payments and solutions sector within Latin America is a testament to the region's burgeoning market potential. The company's organic growth and strategic acquisitions, such as Sinqia and paySmart, position it well to capitalize on the increasing demand for digital payment solutions. The focus on this geographic expansion is aligned with broader industry trends, where payment companies are diversifying their portfolios and reaching into emerging markets for growth opportunities.
However, the reduced Adjusted EBITDA margin, down by approximately 590 basis points in Q4 and 262 basis points for the full year, raises flags about the cost structure and the margins of newly acquired entities. It's essential for EVERTEC to streamline operations and achieve synergies to improve margins. The payments industry is highly competitive and maintaining a healthy margin is crucial for sustaining growth and investor confidence.
Investors should also consider the competitive landscape in which EVERTEC operates. With fintech innovation accelerating, traditional payment processors must continually invest in technology to stay relevant. EVERTEC's planned capital expenditures of approximately $80 million, including Sinqia, indicate a commitment to keeping pace with industry advancements, but also imply significant ongoing costs that could affect profitability.
From a legal standpoint, the acquisition of Sinqia and the completion of the ASR agreement require meticulous regulatory compliance and due diligence. These transactions can have far-reaching legal implications, including antitrust considerations and the need to navigate the complex legal frameworks governing international business and financial markets. It is crucial for EVERTEC to ensure all legal aspects are thoroughly managed to avoid any potential disputes or sanctions that could impact financial performance and company reputation.
The legal complexities of integrating acquisitions across different jurisdictions, such as those in Latin America, should not be underestimated. EVERTEC must align its operations with varying local laws and regulations, which can be a challenging and resource-intensive process. The company's ability to effectively manage these legal intricacies will be vital in realizing the full potential of its growth strategy without incurring additional unexpected costs or legal hurdles.
ANNOUNCES 2024 OUTLOOK
Fourth Quarter 2023 Highlights and Recent Highlights
-
Revenue increased
20% to$194.6 million -
GAAP Net Income attributable to common shareholders was
$11.5 million $0.17 61% decrease -
Adjusted EBITDA increased to
$71.7 million -
Adjusted earnings per common share was
$0.62 6% decrease - Closed the Sinqia acquisition on November 1
-
The Company intends to enter into an accelerated share repurchase (ASR) agreement for
$70 million
Full Year 2023 Highlights
-
Revenue grew
12% to$694.7 million -
GAAP Net Income attributable to common shareholders was
$79.7 million $1.21 -
Adjusted EBITDA increased
6% to$292.0 million -
Adjusted earnings per common share was
$2.82 11% increase -
$49 million
Mac Schuessler, President and Chief Executive Officer stated "We are pleased to deliver another year of strong results as we continue to execute in our core markets and benefit from strong organic growth. As we look to 2024 we will continue to focus on delivering great solutions to our clients that will drive growth and on integrating our most recent acquisitions as we become the true provider of Latin America Payments and Solutions.”
Fourth Quarter 2023 Results
Revenue. Total revenue for the quarter ended December 31, 2023 was
Net Income attributable to common shareholders. For the quarter ended December 31, 2023, GAAP Net Income attributable to common shareholders was
Adjusted EBITDA and Adjusted EBITDA Margin. For the quarter ended December 31, 2023, Adjusted EBITDA was
Adjusted Net Income and Adjusted earnings per common share. For the quarter ended December 31, 2023, Adjusted Net Income was
Full Year 2023 Results
Revenue. Total revenue for the year ended December 31, 2023 was
Net Income attributable to common shareholders. For the year ended December 31, 2023, GAAP Net Income attributable to common shareholders was
Adjusted EBITDA and Adjusted EBITDA Margin. For the year ended December 31, 2023, Adjusted EBITDA was
Adjusted Net Income and Adjusted earnings per common share. For the year ended December 31, 2023, Adjusted Net Income was
Stock Repurchase
The Company intends to enter into an ASR agreement for
During the quarter, the Company repurchased 344,715 shares of its common stock at an average price of
2024 Outlook
The Company's financial outlook for 2024 is as follows:
-
Total consolidated revenue between
$844 million $854 million 21.5% to22.9% growth. -
Adjusted earnings per common share between
$2.82 $2.94 4.3% growth as compared to$2.82 -
Capital expenditures are anticipated to be approximately
$80 million -
Effective tax rate of approximately
7% to8% .
Earnings Conference Call and Audio Webcast
The Company will host a conference call to discuss its fourth quarter and full year 2023 financial results today at 4:30 p.m. ET. Hosting the call will be Mac Schuessler, President and Chief Executive Officer, and Joaquin Castrillo, Chief Financial Officer. The conference call can be accessed live over the phone by dialing (888) 338-7153 or for international callers by dialing (412) 317-5117. A replay will be available one hour after the end of the conference call and can be accessed by dialing (877) 344-7529 or (412) 317-0088 for international callers; the pin number is 3065281. The replay will be available through Wednesday, March 6, 2024. The call will be webcast live from the Company’s website at www.evertecinc.com under the Investor Relations section or directly at http://ir.evertecinc.com. A supplemental slide presentation that accompanies this call and webcast can be found on the investor relations website at ir.evertecinc.com and will remain available after the call.
About EVERTEC
EVERTEC, Inc. (NYSE: EVTC) is a leading full-service transaction processing business in
Use of Non-GAAP Financial Information
The non-GAAP measures referenced in this earnings release are supplemental measures of the Company’s performance and are not required by, or presented in accordance with, accounting principles generally accepted in
Reconciliations of the non-GAAP measures to the most directly comparable GAAP measure are included at the end of this earnings release. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, each as defined below. Effective for the quarter ended March 31, 2023, the Company modified the manner in which it calculates Adjusted EBITDA, Adjusted Net Income and Adjusted earnings per common share to exclude the impact of unrealized gains and losses from foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. These non-cash unrealized gains and losses are non-operational in nature and we believe that excluding these better presents the overall financial performance of our core business, and helps facilitate comparison with industry peers. The Company has recast prior periods to conform with the modified definition of Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain non-cash items and unusual expenses such as: share-based compensation, restructuring related expenses, fees and expenses from corporate transactions such as M&A activity and financing, equity investment income net of dividends received, and the impact from unrealized gains and losses on foreign currency remeasurement for assets and liabilities in non-functional currency. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to the Company's segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K. The Company's presentation of Adjusted EBITDA is substantially consistent with the equivalent measurements that are contained in the secured credit facilities in testing EVERTEC Group’s compliance with covenants therein such as the secured leverage ratio.
Adjusted Net Income is defined as Adjusted EBITDA less: operating depreciation and amortization expense, defined as GAAP Depreciation and amortization less amortization of intangibles related to acquisitions such as customer relationships, trademarks; cash interest expense defined as GAAP interest expense, less GAAP interest income adjusted to exclude non-cash amortization of debt issue costs, premium and accretion of discount; income tax expense which is calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for uncertain tax position releases, tax true-ups, windfall from share-based compensation, unrealized gains and losses from foreign currency remeasurement, among others; and non-controlling interests, net of amortization for intangibles created as part of the purchase.
Adjusted Earnings per common share is defined as Adjusted Net Income divided by diluted shares outstanding.
The Company uses Adjusted Net Income to measure the Company's overall profitability because the Company believes it better reflects the comparable operating performance by excluding the impact of the non-cash amortization and depreciation that was created as a result of merger and acquisition activity. In addition, in evaluating EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per common share, you should be aware that in the future the Company may incur expenses such as those excluded in calculating them.
Forward-Looking Statements
Certain statements in this earnings release constitute “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our ability to meet our guidance expectations for revenue, earnings per share, Adjusted earnings per common share, capital expenditures and effective tax rate, including for fiscal year 2023, are forward looking statements. Words such as “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” and “plans” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts.
Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: our reliance on our relationship with Popular, Inc. (“Popular”) for a significant portion of our revenues pursuant to our second amended and restated Master Services Agreement (“MSA”) with them, and as it may impact our ability to grow our business; our ability to renew our client contracts on terms favorable to us, including but not limited to the current term and any extension of the MSA with Popular; our dependence on our processing systems, technology infrastructure, security systems and fraudulent payment detection systems, as well as on our personnel and certain third parties with whom we do business, and the risks to our business if our systems are hacked or otherwise compromised; our ability to develop, install and adopt new software, technology and computing systems; a decreased client base due to consolidations and/or failures in the financial services industry; the credit risk of our merchant clients, for which we may also be liable; the continuing market position of the ATH network; a reduction in consumer confidence, whether as a result of a global economic downturn or otherwise, which leads to a decrease in consumer spending; our dependence on credit card associations, including any adverse changes in credit card association or network rules or fees; changes in the regulatory environment and changes in macroeconomic, market, international, legal, tax, political, or administrative conditions, including inflation or the risk of recession; the geographical concentration of our business in
EVERTEC, Inc. |
||||||||||||||||
Schedule 1: Unaudited Consolidated Statements of Income and Comprehensive Income |
||||||||||||||||
|
|
Quarter ended December 31, |
|
Year ended December 31, |
||||||||||||
(Dollar amounts in thousands, except share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
$ |
194,621 |
|
|
$ |
161,787 |
|
|
$ |
694,709 |
|
|
$ |
618,409 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses |
|
|
|
|
|
|
|
|
||||||||
Cost of revenues, exclusive of depreciation and amortization shown below |
|
|
98,607 |
|
|
|
77,377 |
|
|
|
336,756 |
|
|
|
292,621 |
|
Selling, general and administrative expenses |
|
|
44,338 |
|
|
|
23,334 |
|
|
|
128,172 |
|
|
|
89,770 |
|
Depreciation and amortization |
|
|
29,941 |
|
|
|
20,186 |
|
|
|
93,621 |
|
|
|
78,618 |
|
Total operating costs and expenses |
|
|
172,886 |
|
|
|
120,897 |
|
|
|
558,549 |
|
|
|
461,009 |
|
Income from operations |
|
|
21,735 |
|
|
|
40,890 |
|
|
|
136,160 |
|
|
|
157,400 |
|
Non-operating income (expenses) |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
3,350 |
|
|
|
842 |
|
|
|
8,512 |
|
|
|
3,121 |
|
Interest expense |
|
|
(15,329 |
) |
|
|
(6,530 |
) |
|
|
(32,321 |
) |
|
|
(24,772 |
) |
Gain on sale of a business |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
135,642 |
|
(Loss) on foreign currency remeasurement |
|
|
(939 |
) |
|
|
(787 |
) |
|
|
(8,276 |
) |
|
|
(7,645 |
) |
Gain (loss) on foreign currency swap |
|
|
5,160 |
|
|
|
— |
|
|
|
(24,065 |
) |
|
|
— |
|
Earnings from equity method investment |
|
|
1,148 |
|
|
|
848 |
|
|
|
4,976 |
|
|
|
2,968 |
|
Other (expenses) income |
|
|
(2,387 |
) |
|
|
(483 |
) |
|
|
367 |
|
|
|
1,138 |
|
Total non-operating (expenses) income |
|
|
(8,997 |
) |
|
|
(6,110 |
) |
|
|
(50,807 |
) |
|
|
110,452 |
|
Income before income taxes |
|
|
12,738 |
|
|
|
34,780 |
|
|
|
85,353 |
|
|
|
267,852 |
|
Income tax expense |
|
|
931 |
|
|
|
6,072 |
|
|
|
5,477 |
|
|
|
28,983 |
|
Net income |
|
|
11,807 |
|
|
|
28,708 |
|
|
|
79,876 |
|
|
|
238,869 |
|
Less: Net income (loss) attributable to non-controlling interest |
|
|
328 |
|
|
|
— |
|
|
|
154 |
|
|
|
(140 |
) |
Net income attributable to EVERTEC, Inc.’s common stockholders |
|
|
11,479 |
|
|
|
28,708 |
|
|
|
79,722 |
|
|
|
239,009 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
|
|
28,902 |
|
|
|
12,700 |
|
|
|
38,328 |
|
|
|
12,490 |
|
(Loss) gain on cash flow hedges |
|
|
(7,357 |
) |
|
|
391 |
|
|
|
(3,618 |
) |
|
|
19,215 |
|
Unrealized gain (loss) on change in fair value of debt securities available-for-sale |
|
|
16 |
|
|
|
9 |
|
|
|
(15 |
) |
|
|
(68 |
) |
Total comprehensive income attributable to EVERTEC, Inc.’s common stockholders |
|
$ |
33,040 |
|
|
$ |
41,808 |
|
|
$ |
114,417 |
|
|
$ |
270,646 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.18 |
|
|
$ |
0.44 |
|
|
$ |
1.23 |
|
|
$ |
3.48 |
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.44 |
|
|
$ |
1.21 |
|
|
$ |
3.45 |
|
Shares used in computing net income per common share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
65,067,316 |
|
|
|
65,133,639 |
|
|
|
64,932,114 |
|
|
|
68,701,434 |
|
Diluted |
|
|
66,273,215 |
|
|
|
65,824,242 |
|
|
|
65,814,317 |
|
|
|
69,312,717 |
|
EVERTEC, Inc. |
|||||||
Schedule 2: Unaudited Consolidated Balance Sheets |
|||||||
(Dollar amounts in thousands, except share data) |
|
December 31, 2023 |
|
December 31, 2022 |
|||
Assets |
|
|
|
|
|||
Current Assets: |
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
295,600 |
|
$ |
185,274 |
|
Restricted cash |
|
|
23,073 |
|
|
18,428 |
|
Accounts receivable, net |
|
|
126,510 |
|
|
111,493 |
|
Settlement assets |
|
|
51,467 |
|
|
31,542 |
|
Prepaid expenses and other assets |
|
|
64,704 |
|
|
42,392 |
|
Total current assets |
|
|
561,354 |
|
|
389,129 |
|
Debt securities available-for-sale, at fair value |
|
|
2,095 |
|
|
2,203 |
|
Equity securities, at fair value |
|
|
9,413 |
|
|
— |
|
Investment in equity investee |
|
|
21,145 |
|
|
14,661 |
|
Property and equipment, net |
|
|
62,453 |
|
|
56,387 |
|
Operating lease right-of-use asset |
|
|
14,796 |
|
|
15,918 |
|
Goodwill |
|
|
791,700 |
|
|
423,392 |
|
Other intangible assets, net |
|
|
518,070 |
|
|
200,320 |
|
Deferred tax asset |
|
|
47,847 |
|
|
5,701 |
|
Derivative asset |
|
|
4,385 |
|
|
7,440 |
|
Net investment in leases |
|
|
— |
|
|
14 |
|
Other long-term assets |
|
|
27,005 |
|
|
16,578 |
|
Total assets |
|
$ |
2,060,263 |
|
$ |
1,131,743 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|||
Current Liabilities: |
|
|
|
|
|||
Accrued liabilities |
|
$ |
129,160 |
|
$ |
80,666 |
|
Accounts payable |
|
|
66,516 |
|
|
29,730 |
|
Contract liability |
|
|
21,055 |
|
|
15,226 |
|
Income tax payable |
|
|
3,402 |
|
|
9,406 |
|
Current portion of long-term debt |
|
|
23,867 |
|
|
20,750 |
|
Short-term borrowings |
|
|
— |
|
|
20,000 |
|
Current portion of operating lease liability |
|
|
6,693 |
|
|
5,936 |
|
Settlement liabilities |
|
|
47,620 |
|
|
26,696 |
|
Total current liabilities |
|
|
298,313 |
|
|
208,410 |
|
Long-term debt |
|
|
946,816 |
|
|
389,498 |
|
Deferred tax liability |
|
|
87,916 |
|
|
10,111 |
|
Contract liability - long term |
|
|
41,825 |
|
|
34,068 |
|
Operating lease liability - long-term |
|
|
9,033 |
|
|
10,788 |
|
Other long-term liabilities |
|
|
40,984 |
|
|
4,120 |
|
Total liabilities |
|
|
1,424,887 |
|
|
656,995 |
|
Redeemable non-controlling interests |
|
|
36,968 |
|
|
— |
|
Stockholders’ equity |
|
|
|
|
|||
Preferred stock, par value |
|
|
— |
|
|
— |
|
Common stock, par value |
|
|
654 |
|
|
648 |
|
Additional paid-in capital |
|
|
36,527 |
|
|
— |
|
Accumulated earnings |
|
|
538,903 |
|
|
487,349 |
|
Accumulated other comprehensive income (loss), net of tax |
|
|
18,209 |
|
|
(16,486 |
) |
Total EVERTEC, Inc. stockholders’ equity |
|
|
594,293 |
|
|
471,511 |
|
Non-controlling interest |
|
|
4,115 |
|
|
3,237 |
|
Total equity |
|
|
598,408 |
|
|
474,748 |
|
Total liabilities and equity |
|
$ |
2,060,263 |
|
$ |
1,131,743 |
|
EVERTEC, Inc. |
||||||||
Schedule 3: Unaudited Consolidated Statements of Cash Flows |
||||||||
|
|
Years ended December 31, |
||||||
(In thousands) |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities |
|
|
|
|
||||
Net income |
|
$ |
79,876 |
|
|
$ |
238,869 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
93,621 |
|
|
|
78,618 |
|
Amortization of debt issue costs and accretion of discount |
|
|
2,307 |
|
|
|
2,238 |
|
Operating lease amortization |
|
|
6,252 |
|
|
|
6,112 |
|
Unrealized loss on change in fair value of equity securities |
|
|
769 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
|
1,433 |
|
|
|
1,311 |
|
Provision for expected credit losses and sundry losses |
|
|
1,040 |
|
|
|
4,959 |
|
Deferred tax benefit |
|
|
(16,144 |
) |
|
|
(435 |
) |
Share-based compensation |
|
|
25,732 |
|
|
|
19,956 |
|
Gain on sale of a business |
|
|
— |
|
|
|
(135,642 |
) |
Loss on disposition of property and equipment and impairment of software |
|
|
969 |
|
|
|
4,943 |
|
Earnings of equity method investment |
|
|
(4,976 |
) |
|
|
(2,968 |
) |
Dividend received from equity method investment |
|
|
3,497 |
|
|
|
2,053 |
|
Loss (gain) on foreign currency remeasurement |
|
|
8,276 |
|
|
|
7,645 |
|
(Increase) decrease in assets: |
|
|
|
|
||||
Accounts receivable, net |
|
|
(6,850 |
) |
|
|
(15,571 |
) |
Prepaid expenses and other assets |
|
|
(16,862 |
) |
|
|
(4,636 |
) |
Other long-term assets |
|
|
(5,383 |
) |
|
|
(5,202 |
) |
Increase (decrease) in liabilities: |
|
|
|
|
||||
Accrued liabilities and accounts payable |
|
|
59,619 |
|
|
|
26,954 |
|
Income tax payable |
|
|
(6,631 |
) |
|
|
1,281 |
|
Contract liability |
|
|
8,074 |
|
|
|
(1,773 |
) |
Operating lease liabilities |
|
|
(5,723 |
) |
|
|
(3,797 |
) |
Other long-term liabilities |
|
|
(4,606 |
) |
|
|
(1,554 |
) |
Total adjustments |
|
|
144,414 |
|
|
|
(15,508 |
) |
Net cash provided by operating activities |
|
|
224,290 |
|
|
|
223,361 |
|
Cash flows from investing activities |
|
|
|
|
||||
Additions to software |
|
|
(63,524 |
) |
|
|
(44,850 |
) |
Acquisition of customer relationship |
|
|
— |
|
|
|
(10,607 |
) |
Acquisitions, net of cash acquired |
|
|
(417,566 |
) |
|
|
(44,369 |
) |
Property and equipment acquired |
|
|
(21,452 |
) |
|
|
(27,073 |
) |
Proceeds from sales of property and equipment |
|
|
24 |
|
|
|
78 |
|
Purchase of certificates of deposit |
|
|
— |
|
|
|
(7,264 |
) |
Proceeds from maturities of available-for-sale debt securities |
|
|
1,048 |
|
|
|
1,015 |
|
Acquisition of available-for-sale debt securities |
|
|
(962 |
) |
|
|
(254 |
) |
Investment in equity investee |
|
|
(5,500 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(507,932 |
) |
|
|
(133,324 |
) |
Cash flows from financing activities |
|
|
|
|
||||
Debt issuance costs |
|
|
(10,481 |
) |
|
|
(7,355 |
) |
Proceeds from issuance of long-term debt |
|
|
651,000 |
|
|
|
415,000 |
|
Net (decrease) increase in short-term borrowings |
|
|
(20,000 |
) |
|
|
20,000 |
|
Repayments of short-terms borrowings for purchase of equipment and software |
|
|
(7,175 |
) |
|
|
(949 |
) |
Dividends paid |
|
|
(13,025 |
) |
|
|
(13,773 |
) |
Withholding taxes paid on share-based compensation |
|
|
(5,956 |
) |
|
|
(5,685 |
) |
Repurchase of common stock |
|
|
(36,096 |
) |
|
|
(96,596 |
) |
Repayment of long-term debt |
|
|
(154,280 |
) |
|
|
(467,410 |
) |
Repayment of other financing agreement |
|
|
(717 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
403,270 |
|
|
|
(156,768 |
) |
Effect of foreign exchange rate on cash, cash equivalents and restricted cash |
|
|
8,439 |
|
|
|
(3,529 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
128,067 |
|
|
|
(70,260 |
) |
Cash, cash equivalents, restricted cash, and cash included in settlement assets at beginning of the period |
|
|
215,657 |
|
|
|
285,917 |
|
Cash, cash equivalents, restricted cash, and cash included in settlement assets at end of the period |
|
$ |
343,724 |
|
|
$ |
215,657 |
|
EVERTEC, Inc. |
||||||||||||||||||||
Schedule 4: Unaudited Segment Information |
||||||||||||||||||||
|
Quarter Ended December 31, 2023 |
|||||||||||||||||||
(In thousands) |
Payment Services -
|
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues |
$ |
52,408 |
|
|
$ |
65,955 |
|
|
$ |
40,214 |
|
$ |
57,772 |
|
$ |
(21,728 |
) |
|
$ |
194,621 |
Operating costs and expenses |
|
29,798 |
|
|
|
65,461 |
|
|
|
27,952 |
|
|
43,110 |
|
|
6,565 |
|
|
|
172,886 |
Depreciation and amortization |
|
7,000 |
|
|
|
12,233 |
|
|
|
1,212 |
|
|
4,236 |
|
|
5,260 |
|
|
|
29,941 |
Non-operating income (expenses) |
|
123 |
|
|
|
(2,558 |
) |
|
|
— |
|
|
137 |
|
|
5,280 |
|
|
|
2,982 |
EBITDA |
|
29,733 |
|
|
|
10,169 |
|
|
|
13,474 |
|
|
19,035 |
|
|
(17,753 |
) |
|
|
54,658 |
Compensation and benefits (2) |
|
875 |
|
|
|
1,099 |
|
|
|
949 |
|
|
981 |
|
|
3,892 |
|
|
|
7,796 |
Transaction, refinancing and other fees (3) |
|
313 |
|
|
|
5,972 |
|
|
|
— |
|
|
— |
|
|
2,020 |
|
|
|
8,305 |
(Gain) loss on foreign currency remeasurement (4) |
$ |
(70 |
) |
|
$ |
1,011 |
|
|
$ |
— |
|
$ |
— |
|
$ |
(2 |
) |
|
$ |
939 |
Adjusted EBITDA |
$ |
30,851 |
|
|
$ |
18,251 |
|
|
$ |
14,423 |
|
$ |
20,016 |
|
$ |
(11,843 |
) |
|
$ |
71,698 |
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the foreign currency swap gain and the elimination of unrealized equity earnings from our |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
Quarter Ended December 31, 2022 |
|||||||||||||||||||
(In thousands) |
Payment Services -
|
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues |
$ |
47,803 |
|
|
$ |
34,913 |
|
$ |
40,006 |
|
$ |
58,679 |
|
$ |
(19,614 |
) |
|
$ |
161,787 |
|
Operating costs and expenses |
|
26,853 |
|
|
|
29,561 |
|
|
26,688 |
|
|
39,168 |
|
|
(1,373 |
) |
|
|
120,897 |
|
Depreciation and amortization |
|
5,317 |
|
|
|
4,493 |
|
|
1,056 |
|
|
4,240 |
|
|
5,080 |
|
|
|
20,186 |
|
Non-operating income (expenses) |
|
330 |
|
|
|
47 |
|
|
392 |
|
|
491 |
|
|
(1,682 |
) |
|
|
(422 |
) |
EBITDA |
|
26,597 |
|
|
|
9,892 |
|
|
14,766 |
|
|
24,242 |
|
|
(14,843 |
) |
|
|
60,654 |
|
Compensation and benefits (2) |
|
788 |
|
|
|
840 |
|
|
357 |
|
|
611 |
|
|
2,384 |
|
|
|
4,980 |
|
Transaction, refinancing and other fees (3) |
|
748 |
|
|
|
145 |
|
|
— |
|
|
— |
|
|
1,842 |
|
|
|
2,735 |
|
(Gain) loss on foreign currency remeasurement (4) |
|
(147 |
) |
|
|
934 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
787 |
|
Adjusted EBITDA |
$ |
27,986 |
|
|
$ |
11,811 |
|
$ |
15,123 |
|
$ |
24,853 |
|
$ |
(10,617 |
) |
|
$ |
69,156 |
|
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the |
|
(2) |
Primarily represents share-based compensation. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the 2022 Credit Agreement and the elimination of unrealized equity earnings from our |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
Year Ended December 31, 2023 |
||||||||||||||||||||
(In thousands) |
Payment Services -
|
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
$ |
203,232 |
|
|
$ |
186,503 |
|
|
$ |
162,366 |
|
$ |
226,960 |
|
$ |
(84,352 |
) |
|
$ |
694,709 |
|
Operating costs and expenses |
|
114,817 |
|
|
|
167,047 |
|
|
|
109,254 |
|
|
161,763 |
|
|
5,668 |
|
|
|
558,549 |
|
Depreciation and amortization |
|
25,178 |
|
|
|
25,235 |
|
|
|
4,569 |
|
|
17,672 |
|
|
20,967 |
|
|
|
93,621 |
|
Non-operating income (expenses) |
|
713 |
|
|
|
(6,201 |
) |
|
|
308 |
|
|
804 |
|
|
(22,622 |
) |
|
|
(26,998 |
) |
EBITDA |
|
114,306 |
|
|
|
38,490 |
|
|
|
57,989 |
|
|
83,673 |
|
|
(91,675 |
) |
|
|
202,783 |
|
Compensation and benefits (2) |
|
2,908 |
|
|
|
3,609 |
|
|
|
3,003 |
|
|
3,207 |
|
|
16,585 |
|
|
|
29,312 |
|
Transaction, refinancing, exit activity and other fees (3) |
|
1,163 |
|
|
|
9,676 |
|
|
|
— |
|
|
— |
|
|
40,761 |
|
|
|
51,600 |
|
(Gain) loss on foreign currency remeasurement (4) |
|
(111 |
) |
|
|
8,383 |
|
|
|
— |
|
|
— |
|
|
4 |
|
|
|
8,276 |
|
Adjusted EBITDA |
$ |
118,266 |
|
|
$ |
60,158 |
|
|
$ |
60,992 |
|
$ |
86,880 |
|
$ |
(34,325 |
) |
|
$ |
291,971 |
|
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the foreign currency swap loss and the elimination of unrealized equity earnings from our |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
Year Ended December 31, 2022 |
||||||||||||||||||||
(In thousands) |
Payment Services -
|
|
Latin America Payments and Solutions |
|
Merchant Acquiring, net |
|
Business Solutions |
|
Corporate and Other (1) |
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues |
$ |
178,481 |
|
$ |
128,221 |
|
|
$ |
151,085 |
|
$ |
235,299 |
|
|
$ |
(74,677 |
) |
|
$ |
618,409 |
|
Operating costs and expenses |
|
103,773 |
|
|
106,693 |
|
|
|
94,976 |
|
|
156,915 |
|
|
|
(1,348 |
) |
|
|
461,009 |
|
Depreciation and amortization |
|
20,379 |
|
|
14,121 |
|
|
|
4,160 |
|
|
17,027 |
|
|
|
22,931 |
|
|
|
78,618 |
|
Non-operating income (expenses) |
|
1,258 |
|
|
(3,318 |
) |
|
|
1,372 |
|
|
138,033 |
|
|
|
(5,242 |
) |
|
|
132,103 |
|
EBITDA |
|
96,345 |
|
|
32,331 |
|
|
|
61,641 |
|
|
233,444 |
|
|
|
(55,640 |
) |
|
|
368,121 |
|
Compensation and benefits (2) |
|
3,357 |
|
|
3,598 |
|
|
|
1,641 |
|
|
2,114 |
|
|
|
9,625 |
|
|
|
20,335 |
|
Transaction, refinancing, and other fees (3) |
|
1,078 |
|
|
145 |
|
|
|
325 |
|
|
(134,990 |
) |
|
|
13,461 |
|
|
|
(119,981 |
) |
Loss on foreign currency remeasurement (4) |
|
80 |
|
|
6,533 |
|
|
|
— |
|
|
— |
|
|
|
1,032 |
|
|
|
7,645 |
|
Adjusted EBITDA |
$ |
100,860 |
|
$ |
42,607 |
|
|
$ |
63,607 |
|
$ |
100,568 |
|
|
$ |
(31,522 |
) |
|
$ |
276,120 |
|
(1) |
Corporate and Other consists of corporate overhead, certain leveraged activities, other non-operating expenses and intersegment eliminations. Intersegment revenue eliminations predominantly reflect the |
|
(2) |
Primarily represents share-based compensation and severance payments. |
|
(3) |
Primarily represents fees and expenses associated with corporate transactions as defined in the 2022 Credit Agreement, the gain from the Popular transaction and the elimination of unrealized equity earnings from our |
|
(4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
EVERTEC, Inc. |
||||||||||||||||
Schedule 5: Reconciliation of GAAP to Non-GAAP Operating Results |
||||||||||||||||
|
|
Quarter ended December 31, |
|
Year ended December 31, |
||||||||||||
(Dollar amounts in thousands, except share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
|
$ |
11,807 |
|
|
$ |
28,708 |
|
|
$ |
79,876 |
|
|
$ |
238,869 |
|
Income tax expense |
|
|
931 |
|
|
|
6,072 |
|
|
|
5,477 |
|
|
|
28,983 |
|
Interest expense, net |
|
|
11,979 |
|
|
|
5,688 |
|
|
|
23,809 |
|
|
|
21,651 |
|
Depreciation and amortization |
|
|
29,941 |
|
|
|
20,186 |
|
|
|
93,621 |
|
|
|
78,618 |
|
EBITDA |
|
|
54,658 |
|
|
|
60,654 |
|
|
|
202,783 |
|
|
|
368,121 |
|
Equity income(1) |
|
|
(1,148 |
) |
|
|
(848 |
) |
|
|
(1,945 |
) |
|
|
(1,121 |
) |
Compensation and benefits (2) |
|
|
7,796 |
|
|
|
4,980 |
|
|
|
29,312 |
|
|
|
20,335 |
|
Transaction, refinancing and other fees (3) |
|
|
9,453 |
|
|
|
3,583 |
|
|
|
53,545 |
|
|
|
(118,860 |
) |
Loss on foreign currency remeasurement (4) |
|
|
939 |
|
|
|
787 |
|
|
|
8,276 |
|
|
|
7,645 |
|
Adjusted EBITDA |
|
|
71,698 |
|
|
|
69,156 |
|
|
|
291,971 |
|
|
|
276,120 |
|
Operating depreciation and amortization (5) |
|
|
(14,648 |
) |
|
|
(11,262 |
) |
|
|
(52,913 |
) |
|
|
(44,418 |
) |
Cash interest expense, net (6) |
|
|
(12,711 |
) |
|
|
(5,876 |
) |
|
|
(24,286 |
) |
|
|
(21,008 |
) |
Income tax expense (7) |
|
|
(3,183 |
) |
|
|
(8,564 |
) |
|
|
(29,038 |
) |
|
|
(35,631 |
) |
Non-controlling interest (8) |
|
|
(353 |
) |
|
|
(24 |
) |
|
|
(257 |
) |
|
|
34 |
|
Adjusted Net Income |
|
$ |
40,803 |
|
|
$ |
43,430 |
|
|
$ |
185,477 |
|
|
$ |
175,097 |
|
Net income per common share (GAAP): |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
$ |
0.18 |
|
|
$ |
0.44 |
|
|
$ |
1.21 |
|
|
$ |
3.45 |
|
Adjusted earnings per common share (Non-GAAP): |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
$ |
0.62 |
|
|
$ |
0.66 |
|
|
$ |
2.82 |
|
|
$ |
2.53 |
|
Shares used in computing adjusted earnings per common share: |
|
|
|
|
|
|
|
|
||||||||
Diluted |
|
|
66,273,215 |
|
|
|
65,824,242 |
|
|
|
65,814,317 |
|
|
|
69,312,717 |
|
1) |
Represents the elimination of non-cash equity earnings from our |
|
2) |
Primarily represents share-based compensation and severance payments. |
|
3) |
Represents fees and expenses associated with corporate transactions as defined in the Credit Agreement, the gain from the Popular Transaction and the foreign currency swap. |
|
4) |
Represents non-cash unrealized gains (losses) on foreign currency remeasurement for assets and liabilities denominated in non-functional currencies. |
|
5) |
Represents operating depreciation and amortization expense, which excludes amounts generated as a result of merger and acquisition activity. |
|
6) |
Represents interest expense, less interest income, as they appear on our consolidated statements of income and comprehensive income, adjusted to exclude non-cash amortization of the debt issue costs, premium and accretion of discount. |
|
7) |
Represents income tax expense calculated on adjusted pre-tax income using the applicable GAAP tax rate, adjusted for certain discrete items. |
|
8) |
Represents the non-controlling equity interests, net of amortization for intangibles created as part of the purchase. |
EVERTEC, Inc. |
||||||||||||||
Schedule 6: Outlook Summary and Reconciliation to Non-GAAP Adjusted Earnings per Share |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
Outlook 2024 |
|
|
2023 |
|
||||||||
(Dollar amounts in millions, except per share data) |
|
Low |
|
|
|
High |
|
|
||||||
Revenues |
|
$ |
844 |
|
|
to |
|
$ |
854 |
|
|
$ |
695 |
|
Earnings per Share (EPS) (GAAP) |
|
$ |
1.45 |
|
|
to |
|
$ |
1.61 |
|
|
$ |
1.21 |
|
Per share adjustment to reconcile GAAP EPS to Non-GAAP Adjusted EPS: |
|
|
|
|
|
|
|
|
||||||
Share-based comp, non-cash equity earnings and other (1) |
|
|
0.78 |
|
|
|
|
|
0.78 |
|
|
|
1.36 |
|
Merger and acquisition related depreciation and amortization (2) |
|
|
0.71 |
|
|
|
|
|
0.67 |
|
|
|
0.62 |
|
Non-cash interest expense (3) |
|
|
0.05 |
|
|
|
|
|
0.05 |
|
|
|
(0.01 |
) |
Tax effect of non-gaap adjustments (4) |
|
|
(0.11 |
) |
|
|
|
|
(0.11 |
) |
|
|
(0.36 |
) |
Non-controlling interest (5) |
|
|
(0.06 |
) |
|
|
|
|
(0.06 |
) |
|
|
— |
|
Total adjustments |
|
|
1.37 |
|
|
|
|
|
1.33 |
|
|
|
1.61 |
|
Adjusted EPS (Non-GAAP) |
|
$ |
2.82 |
|
|
to |
|
$ |
2.94 |
|
|
$ |
2.82 |
|
Shares used in computing adjusted earnings per common share |
|
|
|
|
|
|
65.5 |
|
|
|
65.8 |
|
||
(1) |
Represents share-based compensation, the elimination of non-cash equity earnings from the Company's |
|
(2) |
Represents depreciation and amortization expenses amounts generated as a result of M&A activity. |
|
(3) |
Represents non-cash amortization of the debt issue costs, premium and accretion of discount. |
|
(4) |
Represents income tax expense on non-GAAP adjustments using the applicable GAAP tax rate (anticipated at approximately |
|
(5) |
Represents the non-controlling equity interests, net of amortization for intangibles created as part of the purchase. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228902262/en/
Investor Contact
Beatriz Brown-Sáenz
(787) 773-5442
IR@evertecinc.com
Source: EVERTEC
FAQ
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